Tax Extension: To File or Not to File

Tax season can be stressful enough without the added burden of filing for an extension. An extension is used by taxpayers who need extra time in preparing their taxes. It can be obtained as easily as calling the IRS and requesting an extension or by filling out a simple form and sending it in. The forms can be downloaded and printed off on the IRS website at www.irs.gov. Search for "extension" and the needed form will be shown on the page.

Filling out the form or calling for the extension is the easy part. There is a lot more that goes into filing for an extension than that, though. One thing that many people do not realize is that an extension is only grants the taxpayer more time to file the taxes. Payment is still expected by the IRS by the deadline. If that payment is not made, then interest will be charged. It is best to not file for an extension simply to avoid payment, as that will not work.

Paperwork needs to be in order before filing for an extension. It is imperative that you know how much you are going to owe in taxes. If a refund is due, having paperwork in order is not as important, as the refund will not come to you until the taxes are filed. A taxpayer that owes a balance, though, needs to have the taxes as close to finished as possible, as the amount that is owed needs to be known. At worst, a very good estimate is needed. Therefore, an extension is not to be used if the taxpayer simply feels like putting off doing their taxes. Instead, it needs to be used to make finishing touches on taxes that are almost completed.

Many people do not realize that if an extension is filed, the ability to file online is gone for that year. Late taxes cannot be e-filed. Therefore, a printed copy will have to be mailed of the late taxes. Taxpayers need to make preparations for that, as it will take longer for the IRS to receive the taxes. Normally, the word "Extension" is expected to be written on the top of the tax form, even though the taxpayer has already filed the extension.

If an extension is filed, the taxpayer should call the IRS and verify that the taxes were received. Taxpayers are very used to filing online now, and with that type of filing, a confirmation is given. No confirmations are given when a tax return is mailed. Therefore, to ensure that the taxes are processed in a timely fashion, the taxpayer needs to make sure they were received. If not, the taxpayer needs to send in an additional copy of the taxes.

Of course, that means that a taxpayer should never, EVER, forget to make a copy of his or her taxes. If a copy is not made and the taxes are not received, a real dilemma can occur. All financial documents should be copied and kept in a safe place in case they are needed down the line. Receipts, W2s and the actual tax papers themselves need to be kept together in case the IRS loses the documents, or in case the taxpayer gets audited.

A taxpayer should put a good amount of thought into filing for an extension. It does not grant a free pass, and it should not be used in order to simply put taxes off for a month or two. Instead, it should be used as a safety net for those taxpayers that truly need the extra time in order to get their papers together.